By Tim Dulaney, PhD
Georgia Doctor Consents to Order in Settlement of SEC Insider Trading Charges, May 10, 2012, (Litigation Release No. 22364)
In a September 2010 complaint (Litigation Release No. 21644), the SEC alleged that Dr. Bobby V. Khan traded Sciele Pharma, Inc. (a Georgia-based pharmaceutical company) stock based upon material non-public information concerning a tender offer that was to be made by a Japanese company. Yesterday, the US District Court for the Northern District of Georgia entered a consent order requiring Khan to pay over $100,000 (more than double his illicit trading profits).
SEC Charges Manhattan Resident with Carrying Out a Complex Market Manipulation Scheme, May 10, 2012, (Litigation Release No. 22363)
In their complaint, the SEC alleged that David Blech opened more than 50 brokerage accounts "to buy and sell significant amounts of stock in two biopharmaceutical companies in order to create the artificial appearance of activity in their securities so he could maintain their market price and use it to his own financial advantage." Although Blech had previously been convicted of securities fraud and despite being barred from acting as a broker-dealer, Blech allegedly solicited investments in these (and other)
biopharmaceutical companies. The SEC also named Blech's wife Margaret Chassman for her involvement in the sales of unregistered securities.
SEC Charges Former Detroit Officials and Investment Adviser to City Pension Funds in Influence Peddling Scheme, May 9, 2012, (Litigation Release No. 22362)
The SEC filed charges against Kwame M. Kilpatrick (former Detroit mayor), Jeffrey W. Beasley (former city treasurer) and the city's public pension fund adviser alleging that the group received gifts in exchange for influence over the pension funds' investment process. Kilpatrick and Beasley allegedly solicited and received $125,000 worth of perks from MayfieldGentry Realty Advisors, LLC to encourage the pension funds to invest over $100 million in a REIT controlled by MayfieldGentry. When the pension funds "voted to approve the REIT investment, and MayfieldGentry received millions of dollars in management fees." The SEC complaint in this matter can be found here (link opens PDF).
SEC Charges Arizona Resident with Securities Fraud, May 8, 2012, (Litigation Release No. 22361)
The SEC filed charges against Gerald D. Kegley and his company Prism Financial Services, LLC alleging that the defendants "participated in a fraudulent 'Prime Bank' scheme." The defendants allegedly raised nearly $2 million in investor funds by representing that the funds would be held in escrow until bank guarantees were issued. The investors were told that they could draw upon the bank guarantees without having to repay the funds and that commissions would only be paid if the investors received the bank guarantee. The investor funds were allegedly misappropriated upon receipt and the defendants were paid commission soon after receiving the investor funds.
SEC Charges Movie Producer and Ring of Relatives and Business Partners with Insider Trading, May 8, 2012, (Litigation Release No. 22360A)
This week, the SEC charged Mohammed Mark Amin, Robert Reza Amin (Mohammed's brother), Michael Mahmood Amin (Mohammed's cousin), Sam Saeed Pirnazar (Mohammed's business manager), Mary Coley and Ali Tashakori (Reza's friends) with insider trading in DuPont Fabros Technology, Inc. (a REIT whose common stock is listed on the NYSE). The defendants allegedly traded based on material, non-public information Mohammed Mark Amin learned prior to a company board meeting. The defendants allegedly realized over $600,000 in illicit profits when DuPont Fabros stock precipitously rose after an earnings release that details the material, non-public information on which they traded the stock. The group has agreed to pay nearly $2 million in disgorgement, prejudgment interest and penalties to settle the charges.
Court Enters Final Judgments Against Defendants in Market Timing Case, May 8, 2012, (Litigation Release No. 22359)
In February 2005 (Litigation Release No. 19069), the SEC filed a civil fraud complaint against James Tambone (former president of Columbia Funds Distributor, Inc.) and Robert Hussey (a former sales executive of Columbia Funds Distributor, Inc.) made short-term trading arrangements contrary to the disclosures made in the prospectuses used to sell their company's mutual funds. The arrangements were never disclosed to the long-term fund shareholders or the trustees of the funds. Earlier this week, a Massachusetts federal court entered a final judgment against Tambone and Hussey ordering the pair to pay over $250,000 in disgorgement, prejudgment interest and civil penalties.
SEC Obtains Final Judgment on Consent Against James Fleishman, May 8, 2012, (Litigation Release No. 22358)
The US District Court for the Southern District of New York entered a final judgment against James Fleishman as a result of the SEC complaint alleging a vast insider trading scheme. The scheme produced profits in excess of $30 million through trading on material, non-public information concerning technology companies. In particular, Fleishman "facilitated the transfer of material nonpublic information from [Primary Global Reseach, LLC] consultants to [Primary Global Reseach, LLC] clients." Fleishman was found liable for nearly $50,000 in disgorgement and, as a result of a parallel criminal action, was sentenced to thirty months in prison.
Former Paralegal and Her Father Charged with Insider Trading, May 7, 2012, (Litigation Release No. 22357)
Earlier this week, the SEC charged Angela Milliard and her father, Kenneth Milliard, with insider trading. The father and daughter pair allegedly traded the stock of Semitool (a Montana based Semiconductor company where Angela Milliard was a paralegal) ahead of the company's merger with Applied Materials, Inc. using the confidential deal information obtained by Angela Milliard concerning a tender offer to be made to Semitool stock holders. The Milliards used this information to buy the stock ahead of the tender offer and to realize significant trading profits. Together the Milliards are responsible for approximately $175,000 in disgorgement, prejudgment interest and penalties.
Commission Obtains Preliminary Injunction and Asset Freeze Against Massachusetts-Based Parties Who Misappropriated Investor Funds, May 4, 2012, (Litigation Release No. 22356)
Late last week, the SEC announced that it filed charges against Arnett L. Waters as well as A. L. Waters Capital, LLC and Moneta Management, LLC alleging that the defendants "used fictitious investment-related partnerships to draw in investors, misappropriate their investment money, and spend it on personal expenses." To conceal this scheme, the defendants allegedly made misrepresentations to investors, FINRA and the SEC. The SEC obtained a preliminary injunction from the US District Court in Massachusetts as well as an asset freeze for the defendants named in the complaint (link opens PDF).
- Expert Testimony
- Valuation Services
- Structured Products
- Free Tools